As a result the yield spread between 10-year US and eurozone bonds has risen to 90 basis points, its highest level since March, during which time the dollar has risen 10.7 per cent against the euro.
"Any kind of shift in direction from the ECB is important because they have been extremely reluctant to acknowledge any possibility of an easing move," said Jens Nordvig at Goldman Sachs (NYSE:GS - news), which on Monday revised its euro forecasts downwards for the second time in two weeks, now seeing the euro falling to $1.15 in three months' time.
The dollar has been further buoyed by hopes that the US trade deficit, perhaps the key factor in the greenback's three-year decline, may finally have stabilised in the $56bn-$58bn range following the release of better-than-expected April data last week.
Big banks are also increasingly reporting large repatriation flows by US multinationals under the auspices of the Homeland Investment Act, a year-long tax break designed to encourage US companies to bring home earnings held abroad.
Repatriation had been held up by uncertainty over the accounting treatment of the money, but with these issues now overcome, JP Morgan believes US companies will repatriate $100bn (£55bn, EU83bn) before the end of the year, most of which would be converted from euros.
We've made it worth big buisness money to bring the money back into dollars
the eu is collapsing
and surprise surprise the euro is dropping like a rock
Lets here it for all the countries who thumbed their nose and the bullying tactics of brussels for passing this debaulical (what an abortion) -you Bubba Army viewers out there know that like-
lets toast the death of the EURO and lets pat ole Johny Greenback on the back and say "we knew you'd win Johny"
and hope George Soros is still heavy in the Euro
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